Europe Q4 methanol settlement further delayed by strong euro

01 October 2010 14:26[Source: ICIS news]

LONDON (ICIS)--Settlement of the fourth quarter methanol contract has been further delayed as the strengthening of the euro has contributed to resistance from buyers to settle at increases proposed by producers, market sources said on Friday.

The strengthening of the euro from 0.79 to 0.73 versus the dollar over the past three weeks has further entrenched many consumers’ positions of not accepting an increase of more than €10-15/tonne.

“It should have an impact on the price…but there has been no reaction from suppliers [to the stronger euro]. I’m willing to accept a slight increase, €270/tonne max,” said a large buyer.

“The recovery of the euro means there is no reason for an increase. If the price goes higher then we will be the highest priced region. Every parcel in the world will find its way to ?xml:namespace>Europe,” said another significant buyer, who was arguing for a rollover but was willing to accept an increase of €10/tonne, maximum.

However, one producer said that Europe is a net import market and would require high prices in order to attract sufficient volumes.

“There is still a significant gap [in price ideas]. We have consumers willing to go close to €270/tonne ($370/tonne), but we are not prepared to discuss anything below €285/tonne,” said the producer.

Market players said negotiations could even go beyond the 44th annual European Petrochemical Association (EPCA) meeting on 2-6 October.

One buyer said it thought no agreement would be settled during the conference due to the increased risk of anti-trust issues in such an intimate setting, and that a finalised price was not likely before 8 October.

The third quarter contract price was settled at €255/tonne FOB (free on board) Rotterdam.